S&P warns of higher risks of regional defaults in Russia

REUTERS

"This is reflected in our primarily negative rating actions in the last 18 months, resulting from what we regard as weak prospects for economic growth and a slowdown in corporate profits and nominal personal income growth," said Standard&Poor credit analyst Karen Vartapetov, adding that this undermines regions' key revenue sources -corporate profit tax and personal income tax.

At the same time, the pressure from the federal government to increase socially-related spending leaves regions with almost no choice but to increase their deficits.

As earlier reported, about 20 Russian regions are facing the likelihood of default.